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Document 217 - Governments Motion To Exclude Good-Faith Defenses, Including Advice of Counsel...This was filed after the Government demanded I declare whether I would assert "Advice of Counsel" as my defense. Upon doing so, I waived the attorney-client-privileged and disclosing all of my information. Ten days before trial and AFTER the Government reviewed all of my evidence, they entered this Motion in Limine, claiming that this defense is unavailable to me. ..
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1The other named defendant, Troy Sobert, pleaded guilty.
1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
UNITED STATES OF AMERICA : : CRIMINAL INDICTMENT
v. : : NO. 1:06-CR-337
CHRISTOPHER STOUFFLET, et al. : :
Defendants. :
GOVERNMENT’S MOTION IN LIMINE TO EXCLUDEGOOD FAITH DEFENSES, INCLUDING ADVICE OF COUNSEL,
MISTAKE OF LAW, AND ERRONEOUS BELIEF THE CONDUCT WAS LEGAL
COMES NOW the United States of America, by its counsel, David
E. Nahmias, United States Attorney for the Northern District of
Georgia, and Randy S. Chartash, and Lawrence Sommerfeld, Assistant
United States Attorneys, and files this Motion In Limine To Exclude
Good Faith Defenses, Including Advice of Counsel, Mistake of Law,
and Erroneous Belief the Conduct Was Legal.
I. The Indictment
Defendant Christopher Stoufflet and six other individuals,
including five doctors, were charged in a fifty-one count
Indictment for their involvement in an Internet-based business that
distributed and dispensed controlled substances and other
prescription drugs to thousands of customers without valid
prescriptions.1 Specifically, Count One of the Indictment charges
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 1 of 14
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defendant Stoufflet and the defendant-doctors with conspiracy to
violate the controlled substance act, 21 U.S.C. § 846; Counts Two
through Four charge defendant Stoufflet and defendant-doctor
Vladimir Andries (Count 3) and defendant-doctor Andre Smith (Counts
2 and 4) with the unlawful distribution and dispensing of
controlled substances, 21 U.S.C. § 841; Count Five charges the
defendants Christopher Stoufflet with conspiracy to money launder,
18 U.S.C. § 1956(h); Counts Six through Forty-Eight charge
defendants Christopher Stoufflet with promotional and transactional
money laundering, 18 U.S.C. §§ 1956, 1957; and Counts Forty-nine
through Fifty-one charge Christopher Stoufflet with misbranding
drugs while held for sale after shipment into interstate commerce,
21 U.S.C. §§ 331(k) and 333(a)(2). See Attachment (table
summarizing counts charged against each defendant).
This case centers around an Internet-based business,
escriptsmd.com, that defendant Christopher Stoufflet, together with
others, established and operated. In 2001, Stoufflet sought to
capitalize on the Internet boom by setting up an on-line business
to sell pharmaceutical products, including controlled substances.
Stoufflet's idea was to find a physician, or several physicians,
who would issue prescriptions for customers who requested
medication on-line. Stoufflet would then cause the dispensing of
the medication, based on the physician's “prescriptions”, to
customers throughout the United States.
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 2 of 14
2Raising an advice of counsel defense waives theattorney-client privilege. See, e.g., United States v.Bilzerian, 926 F.2d 1285, 1292 (2d Cir. 1991)(cannot useattorney-client privilege as both a shield and a sword); UnitedStates v. Burger, 773 F. Supp. 1419, 1429 (D. Kan. 1991)(waiverin context of pretrial discovery); United States v. Mierzwicki,500 F. Supp. 1331, 1334 (D. Md. 1980) (fairness demands treatingthe defense as a waiver of the attorney-client privilege).
3
Throughout the investigation of this matter and continuing up
to this date, the government has sought to find out whether
defendant Stoufflet would rely on the advice of counsel he received
while running the escriptmd.com business. In late November, counsel
for defendant Stoufflet waived attorney-client privilege.2 Counsel
for defendant Stoufflet subsequently produced thousands of
documents to the United States; the government, in turn, provided
copies of those documents to the other remaining defendants. In a
sudden about-face, less than two-weeks ago counsel for defendant
Stoufflet informed the United States that Stoufflet would seek
trial. Counsel has indicated their primary argument rests on
Stoufflet’s supposed good faith beliefs as to the law based on
advice of counsel.
Counsel for the defendant-doctors have also asserted that they
intend to rely on an advice of counsel as well, although their
defense is attenuated. They intend to argue that defendant
Stoufflet or someone from escripts.com told them that they had
consulted an attorney and that the attorney “blessed” the business
model. The Court need not waste its time with this morass at
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 3 of 14
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trial. Good faith defenses, such as advice of counsel, either
directly or once-removed, are unavailing as a matter of law to the
essential charges in the indictment.
In asserting an advice of counsel defense, a defendant, in
essence, represents that he fully disclosed all relevant facts to
an independent attorney, the attorney offered a legal opinion or
rendered legal advice on the legality of a proposed transaction,
and the defendant relied in good faith on this opinion or advice in
determining a course of action. See, e.g., C.E. Carlson, Inc. v.
SEC, 859 F.2d 1429, 1436 (10th Cir. 1988); United States v. Carr,
740 F.2d 339, 347 (5th Cir. 1984). As discussed further below, good
faith defenses, such as the advice of counsel, only apply to crimes
requiring a specific intent to break the law. As to the general
intent crimes charged in the Indictment, such defenses are
irrelevant as a matter of law.
II. Argument
Federal Rule of Evidence 402 provides that evidence which is
not relevant is not admissible. Evidence that neither negates an
element of the charges against a defendant nor establishes a
defense is not relevant.
The defendants are not entitled to present evidence relating
to their erroneous belief that their conduct was legal because the
charged offenses require only a “knowing” scienter, not a “willful”
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 4 of 14
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one. The government is required to show only that defendants knew
they were “in fact performing an act, whether or not [they knew]
that the act has been criminalized by statute.” United States v.
Lynch, 233 F.3d 1139, 1141 (9th Cir. 2000). See also United States
v. Linares, 367 F.3d 941, 948 (D.C.Cir. 2004)(possession of
marijuana with intent to distribute is a general intent offense).
The drug charges and the two conspiracy charges contained in
the Indictment are not crimes in which the defendants’ good faith
belief in the legality of their conduct could negate an element of
the charged conduct. See Bryan v. United States, 524 U.S. 184, 193
(1998)(unless the text of the statute dictates a different result,
the term “knowingly” merely requires proof of knowledge of the
facts that constitute the offense); United States v. Cain, 130 F.3d
381, 384 (9th Cir. 1997)(district court properly gave instruction
in cocaine case that government need not prove defendant knew his
conduct was illegal). Thus, the government moves to exclude any
evidence or argument pertaining to a defense that defendants
erroneously believed their conduct was legal.
All the charges in this Indictment except the substantive
money laundering offenses are general intent crimes to which it is
not a defense that defendants lacked the intent to violate the law.
Simply stated, lack of intent to violate the law is not a defense
to a general intent crime. See United States v. Fahey, 411 F.2d
1213 (9th Cir. 1969)(inability to form specific intent has never
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 5 of 14
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been a defense to general intent crime); United States v. Cain, 130
F.3d 381, 384 (9th Cir. 1997) (district court properly gave
instruction in possession of cocaine with intent to distribute case
that government need not prove the defendant knew his conduct was
illegal).
In sum, like all good faith defenses, the advice of counsel
defense is available only as against specific intent crimes. See
United States v. Powell, 513 F.2d 1249, 1251 (8th Cir.
1975)(holding advice of counsel no defense to crime of unlawful
firearms dealing under § 922 or possession of firearms as a felon
because defendant's specific intent or knowledge was not an
essential element of crimes); United States v. Dyer, 750 F.Supp.
1278, 1293 (E.D.Va.1990) (stating “[i]n general, an advice of
counsel defense applies only where the violation requires proof of
specific intent, that is, proof that a defendant has actual
knowledge that his conduct is illegal.”); see also United States v.
Soares, 998 F.2d 671, 673-74 (9th Cir. 1993)(affirming district
court's decision that offense under 18 U.S.C. § 1954 was not a
specific intent crime and therefore prevented defendant from
offering advice of counsel defense); United States v. Bristol, 473
F.3d 439, 443 (5th Cir. 1973). The reason for this is that the
advice-of-counsel defense is relevant to negate proof of a
defendant's intent to violate the law, and willful intent is an
essential element only in specific intent crimes. See, e.g., United
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3In Dohan, the Eleventh Circuit explicitly rejected thePattern Jury Instruction and held “Pattern Jury Instruction 70.5[Money Laundering Conspiracy] places a higher burden on thegovernment for proving an offense under 18 U.S.C. § 1956(h) thandoes the statute, and should not be used.” 508 F.3d at 993(emphasis added).
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States v. Carr, 740 F.2d 339, 346 (5th Cir. 1984). Thus, good faith
defenses, such as advice of counsel, are irrelevant to the
essential charges of this indictment, which require only general
intent.
A. The Conspiracy Charges (Counts One and Five)
Specifically as to Count One in which all of the defendants
are named, conspiracy to distribute a controlled substance, and
Count Five, conspiracy to money launder, in which only defendant
Stoufflet is charged, these charges require only proof of general
intent. In United States v. Dohan, 508 F.3d 989 (11th Cir. 2007),
the Eleventh Circuit recently held that “[t]he district court
correctly instructed the jury, notwithstanding the pattern jury
instructions, that the appropriate mental state for convicting
under §1956(h) [conspiracy to money launder] was merely ‘knowing
and voluntarily,’ as we have held in cases post-dating the adoption
of the pattern instructions.” Id. at 993 (citing United States v.
Kennard, 472 F.3d 851, 856 (11th Cir. 2006) (“knowingly and
voluntarily participated in the agreement”); United States v.
Silvestri, 409 F.3d 1311, 1328 (11th Cir.2005) (“knowingly and
voluntarily joined or participated in the conspiracy”).3 The money
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laundering conspiracy statute, 18 U.S.C. § 1956(h), and the drug
conspiracy statute, 21 U.S.C. § 846, are virtually identical in
wording. Therefore, under the holding in Dohan there is no
principled basis to distinguish the two and they should be
construed in the same way.
Moreover, the United States Supreme Court has recognized in
construing the federal, general conspiracy statute (18 U.S.C. §
371), that a defendant does not need to know his conduct violates
federal law to be guilty of a conspiracy. Section 371 makes it
unlawful to “conspire ... to commit any offense against the United
States.” The Supreme Court held in United States v. Feola, 420 U.S.
671, 687 (1975) that:
A natural reading of these words would be that since onecan violate a criminal statute simply by engaging in theforbidden conduct, a conspiracy to commit that offense isnothing more than an agreement to engage in theprohibited conduct.
Id. at 687. The drug conspiracy statute, 21 U.S.C. § 846, and the
money laundering conspiracy statute, 18 U.S.C. § 1956(h), are
substantially the same as Section 371, and thus, the holding in
Feola applies here. See also United States v. Ansaldi, 372 F.3d
118, 128 (2nd Cir. 2004)(upholding district court's refusal to give
good faith instruction to § 846 conspiracy charge, stating
“knowledge of, or intent to violate the law is simply not an
element of this offense”); United States v. Baker, 63 F.3d 1478,
1493 (9th Cir. 1995) (recognizing in the context of a conspiracy
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charge under RICO and the Contraband Cigarette Trafficking Act that
“[e]stablishing a defendant's guilt of conspiracy to commit a
substantive crime requires proof of mens rea essential for
conviction of the substantive offense itself ... No greater or
different intent is necessary.”)
Thus, defendants' beliefs concerning the legality or the
propriety of internet prescribing of controlled substances is not
a proper defense, and evidence of their good faiths beliefs,
through the advice of counsel, mistake of law, or any other rubric,
is irrelevant to the charges and should be excluded. See Fed. R.
Evid. 401, 402, 403.
B. The Control Substance Act Charges (Counts Two - Four)
Defendant Stoufflet and defendant-doctors Andries and Smith
are charged in Counts Two through Four of the Indictment with
violating 21 U.S.C. §§ 841(a)(1), which requires a “knowing”
scienter, not a “willful” one. The government is required to show
only that Stoufflet or the defendant-doctors “must know that he is
in fact performing an act, whether or not he knows that the act has
been criminalized by statute.” United States v. Lynch, 233 F.3d
1139, 1141 (9th Cir. 2000). Even if Stoufflet could meet all of
the other elements required for an advice-of-counsel defense, it is
not available as a defense to the general-intent crimes with which
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 9 of 14
4The advice of counsel defense, however, may be raised as adefense to the substantive money laundering charges, Counts 6through 48, as money laundering is a specific intent crime. Thus,evidence that defendant Stoufflet sought and obtained advice fromattorneys as to the legality of the internet on-line prescriptionbusiness is potentially relevant to a defense to the moneylaundering offenses with which he is charged in Counts 6 through48, provided the advice was obtained prior to the alleged date onwhich the specific financial transactions occurred and that it isrelevant to those charges. However, only defendant Stouffletremains as to these counts. Accordingly, such evidence isarguably relevant not to the defendant-doctors, but only as todefendant Stoufflet, and only as to charges of substantive moneylaundering.
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he is charged.4
C. The Federal Food, Drug, and Cosmetic Act Charges (Counts Forty-Nine - Fifty-One)
Defendant Stoufflet is charged in Counts Forty-Nine through
Fifty-One with misbranding drugs while held for sale after shipment
in interstate commerce. Binding precedent holds that “testimony
from the lawyers that defendants consulted . . . on the legality of
the defendants’ acts . . . is not relevant to whether defendants
intended to commit fraud.” In United States v. Walker, 26 F.3d 108,
109 n.1 (11th Cir. 1994), the defendant was convicted of introducing
adulterated food into interstate commerce with intent to defraud
and mislead. Id. at 109. Defendant Walker argued on appeal that
the district court abused its discretion when it excluded testimony
from the lawyers that defendant consulted when seeking advice on
the legality his actions. The Eleventh Circuit in Walker held that
any advice of counsel regarding the legality of certain acts was
irrelevant to the key question – namely, whether the defendant
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 10 of 14
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intended to commit fraud.
For the same reasons, defendant Stoufflet should be precluded
from introducing any evidence or arguing to the jury advice he
received as it relates to the charges in the Indictment alleging
violations of the Federal Food, Drug, and Cosmetic Act.
D. Pre-Trial Ruling
Counsel for defendants have made clear that the so-called
advice of counsel defense and the supposed good faith of their
clients as to the state of the law is their primary defense to the
charges alleged in the Indictment. The United States anticipates
that they will raise the defense in opening statement. The
government intends on objecting to such an argument as these
defenses and any evidence related to these defenses are irrelevant
as a matter law.
Moreover, precluding these irrelevant defenses would
substantially shorten the trial so that the jury could focus on the
relevant issues at hand. In fact, there is little, if any, factual
dispute as to the eScipts business model and as to the part each
defendant played in the distribution and/or dispensing of
controlled substances. The Court should streamline the trial and
exclude evidence or argument as to the defendants’ supposed good
faith, as such inquiry is irrelevant as a matter of law. Moreover,
such evidence and argument endangers unfair prejudice, confusion of
issues, and misleading the jury. Presentation of such irrelevant
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 11 of 14
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defenses would result in undue delay, waste of time, and needless
presentation of evidence.
Given that good faith defenses such as advice of counsel and
mistake of law are not available to defendant Stoufflet and the
other defendants as to the vast majority of the conduct charged in
the Indictment, this Court should preclude evidence and argument of
such defenses under Rules 401, 402, and 403 of the Federal Rules of
Evidence.
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 12 of 14
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III. Conclusion
For the foregoing reasons, this Court should grant the
Government’s Motion in Limine to Exclude Good Faith Defenses,
Including Advice of Counsel, Mistake of Law, and Erroneous Belief
the Conduct Was Legal. Defendant-doctors should be precluded from
presenting any evidence or argument as to their subjective beliefs
as to the legality of their conduct. Defendant Stoufflet should
likewise be precluded, except as relates to the substantive money
laundering counts against him.
Dated: February 28, 2008.
Respectfully submitted,
DAVID E. NAHMIASUNITED STATES ATTORNEY
/S/RANDY S. CHARTASHASSISTANT U.S. ATTORNEYGeorgia Bar No. 121760
/S/LAWRENCE R. SOMMERFELDASSISTANT U.S. ATTORNEYGeorgia Bar No. 666936
600 Richard B. Russell Building75 Spring Street, S.W.Atlanta, GA 30303(404) 581-6009(404) 581-6181 (facsimile)
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 13 of 14
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CERTIFICATE OF COMPLIANCE WITH LOCAL RULE 5.1B
This is to certify that the foregoing document was formatted
in accordance with Local Rule 5.1B in Courier New font, 12 point
type.
CERTIFICATE OF SERVICE
This is to certify that I have this day served upon counsel of
record in this case a copy of the foregoing document via the
Electronic Case Filing system of the United States District Court
for the Northern District of Georgia.
This 28th day of February, 2008.
/S/RANDY S. CHARTASHASSISTANT U.S. ATTORNEY
Case 1:06-cr-00337-CC-JFK Document 217 Filed 02/28/2008 Page 14 of 14